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New words:
admit, American, Carey, Columbia, drawn, eleven, eligible, fka, GV, GVEC, HGR, Highland, MKZR, OTCQX, predecessor, pursuit, SmartStop, Storage, Summit, symbol, ticker, Union, WP
Removed:
amounting, FDIC
Financial report summary
?Risks
- Real estate investments are subject to risks particular to real property, including:
- The market for real estate investments is highly competitive.
- Real estate investments are not as liquid as other types of assets, which may reduce economic returns to our stockholders.
- Investments in real estate-related assets can be speculative.
- We will likely receive limited representations and warranties from sellers.
- We may be subject to the risk of liability and casualty loss as the owner of an investment.
- We could be exposed to environmental liabilities with respect to investments to which we take title.
- Liability relating to environmental matters may impact the value of the properties that we may acquire or underlying our investments.
- Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results.
- Adverse economic conditions may negatively affect our results of operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments.
- We may be adversely affected by unfavorable economic changes in the specific geographic areas where our investments are concentrated.
- Inflation may adversely affect our financial condition and results of operations.
- Our success is materially dependent on attracting qualified tenants.
- We may not be able to re-lease or renew leases at the investments held by us on terms favorable to us or at all.
- The bankruptcy, insolvency or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.
- We may not obtain audited results of prior operations for certain properties in which we investment.
- Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected.
- We may not obtain independent third-party appraisals or valuation reports on all of our investments.
- We may experience delays in the sale of an investment.
- We face possible risks associated with climate change.
- Risks Related to Our Financial Position
- We are subject to risks associated with debt and capital stock issuances, and such issuances may have consequences to holders of shares of our securities.
- If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and stockholders’ overall return will be reduced.
- We do not have guaranteed cash flow.
- While we are subject to minimum distribution requirements to maintain our status as a REIT, such distributions are not guaranteed and the availability and timing of cash distributions is uncertain.
- We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
- We may change our targeted investment and operational policies without stockholder consent.
- The ability of our Board of Directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
- Our future growth will depend upon our ability to acquire real estate investments in several competitive real estate markets.
- Due diligence by our Advisers may not reveal all of the liabilities associated with the investments being evaluated and may not reveal other weaknesses in such investments, which could lead to investment losses.
- We may experience difficulty in ultimately selling any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors.
- Lack of diversification in numbers or types of investments increases our dependence on individual investments.
- Our success is materially dependent on the financial stability of our tenants.
- We are dependent on our Advisers and their key personnel for our success.
- Our Board of Directors has approved very broad investment guidelines for our Advisers and will not approve each investment and financing decision made by our Advisers unless required by our investment guidelines.
- Because we are dependent upon our Advisers and its affiliates to conduct our operations, any adverse changes in the financial or operational condition of our Advisers or its affiliates, or our relationship with them, could hinder our operating performance and the return on your investment.
- Our investments will be carried at estimated fair value as determined by our Investment Adviser and there may be uncertainty as to the value of these investments.
- We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.
- The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
- Risks Related to Our Organization and Corporate Structure
- Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
- Our rights and the rights of our shareholders to recover claims against our officers, directors and our Advisers are limited.
- The Advisory Agreements with our Advisers were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.
- We may have conflicts of interest with our Advisers and other affiliates, which could result in investment decisions that are not in the best interests of our stockholders.
- Our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of real estate investments, and such conflicts may not be resolved in our favor.
- Our Advisers, and the personnel they provide are not exclusively dedicated to management of our business.
- We have not adopted any specific conflicts of interest policies, and, therefore, other than in respect of the restrictions placed on our Advisers in the Advisory Agreements, we will be reliant upon the good faith of our Advisers, officers and directors in the resolution of any conflict.
- We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments.
- High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
- High mortgage rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash distributions we can make.
- Our ability to obtain financing on reasonable terms would be impacted by negative capital market conditions.
- If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.
- Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
- We may use floating rate, interest-only or short-term loans to acquire investments.
- Risks Related to Our Taxation as a REIT
- Our failure to qualify as a REIT would result in higher taxes and reduced cash available for stockholders.
- Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.
- REIT distribution requirements could adversely affect our liquidity.
- Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
- The tax status of the Operating Partnership and other partnerships could impact our qualification as a REIT.
- Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows.
- The stock ownership limit imposed by the Internal Revenue Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities.
- Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
- The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.
- Failure to make required distributions would subject us to U.S. federal corporate income tax.
- We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability and to pay distributions to our stockholders.
- We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
- COVID-19, or the future outbreak of other highly infectious or contagious diseases, has and could continue to materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.
Management Discussion
- Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended March 31, 2024, we generated $4.08 million in rental and reimbursements revenues, of which $2.60 million was generated from our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building, Woodland Corporate Center Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building), and $1.48 million was generated from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments and Shoreline Apartments). During the three months ended March 31, 2023, we generated $4.47 million in rental and reimbursements revenues, of which $2.87 million was generated from our six commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building and Woodland Corporate Center Office Building) and $1.60 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.39 million in rental revenues during the three months ended March 31, 2024 was mainly due to the sale of Addison Corporate Center building in June 2023 partly offset by acquisition of two commercial properties: 220 Campus Lane and Green Valley Executive Center since March 2023.